Chicago is making headlines with its decision to implement the highest tourist tax in U.S. history, a move that is expected to reshape how travelers view the Windy City in the coming years. As the city gears up to host major global events, including the 2026 FIFA World Cup, this tax hike has major implications for the hospitality industry, booking platforms, and, most critically, for tourists themselves. While officials argue the increase will support essential services and infrastructure, critics warn it may deter travelers from choosing Chicago for vacations and conventions.
This bold move signals a significant shift in how municipalities fund tourism impact and city services. Although cities like New York and San Francisco already boast high hotel rates, Chicago’s new levy officially places it at the top of the national chart when it comes to taxes imposed on visitors. For potential tourists and business travelers eyeing 2026 bookings, the real question becomes: Is it still worth it?
Key details at a glance
| Feature | Details |
|---|---|
| New Tourist Tax Rate | 17.4% combined tax rate on hotel stays |
| Effective Date | Already implemented |
| Previous Rate | Approximately 14.3% |
| Scope | Applies to all hotel and vacation rental stays in city limits |
| Reason for Increase | To fund public services, safety, and prepare for major events |
| Major Events Impacted | 2026 FIFA World Cup, increased convention tourism |
| Top Critics | Hospitality industry, tourism boards, economic analysts |
| Top Supporters | City officials, budget committees, some residents |
What changed this year
The decision to raise the combined hotel occupancy tax to a staggering 17.4% came as part of Chicago’s broader strategy to increase revenue without raising property taxes. This new rate combines city, county, and state levies into one of the most aggressive tourism tax schemes nationwide. Previously, the rate hovered around 14.3%, a figure that already placed it among the top tourist-tax cities in the country. This year marks a clear turning point, pushing Chicago ahead of other major urban destinations like Washington D.C., New York, and Los Angeles in terms of visitor taxation.
According to city officials, the additional revenue—estimated to be in the tens of millions annually—will help support efforts to improve public safety, sanitation, and transit systems across tourist-frequented areas. With the city staging multiple large-scale events in coming years, including the much-anticipated 2026 FIFA World Cup, authorities see this as a preemptive step to manage the anticipated influx of global visitors and the inevitable strain on city services.
Tourism industry reaction and public response
Not everyone is applauding the move. Hotels, restaurants, and local tourism groups have raised sharp concerns about the potential ripple effects. Many worry that Chicago is risking its competitiveness as a destination, especially for leisure travelers with budget constraints and event organizers comparing nationwide options for conventions and large-scale gatherings. The American Hotel & Lodging Association has flagged the new tax rate as potentially “damaging” to tour operator relationships and long-term booking confidence.
“This increase sends the wrong message to international guests and could cost the city millions in lost conventions.”
— Alexis Medina, Hospitality Consultant
In addition to weary tourists, some locals are apprehensive about the city’s dependence on tourism dollars and what this might mean if visitor numbers drop. Others, however, welcome the tax as a necessary step for a more equitable allocation of tourist use of public resources. Many residents don’t want local tax hikes to support events they may never attend.
How it impacts 2026 World Cup planning
Chicago is one of several U.S. cities selected to host matches for the 2026 FIFA World Cup, and with the massive global attention this event brings, city leaders argue the infrastructure costs need to be met proactively. Hoteliers, meanwhile, worry that travelers may opt to stay in nearby suburbs to avoid the city rate, putting inner-city establishments and tourism-dependent services at a disadvantage.
“We expect to see a spike in bookings just outside city limits where the taxes are lower. This could offset any projected revenue increases.”
— Danielle Harper, Regional Hotel Chain Director
Experts forecast a dual economy over the period surrounding the World Cup, with suburban accommodations reaping unexpected rewards and downtown hotels facing profitability challenges despite high occupancy.
Winners and losers under the new law
| Winners | Why |
|---|---|
| City Government | Increased revenue for public services and security |
| Suburban Hotels | More competitive due to lower taxes |
| Airbnb Hosts Outside City Limits | Likely to see higher demand |
| Losers | Why |
| Downtown Hotels | Risk of being undercut by surrounding areas |
| Budget Travelers | Higher total cost for overnight stays |
| Event Organizers | Harder to pitch Chicago as a cost-efficient venue |
Long-term implications for tourism
The increase is part of a broader trend where cities struggling with post-pandemic revenue shortfalls and rising public costs are turning to visitors to help foot the bill. In Chicago’s case, the tax hike is permanent, not a temporary measure tied exclusively to the World Cup or short-term budget fixes. That means future travelers will need to incorporate this into their lodging decisions indefinitely.
Industry leaders suggest that the rise in taxes could eventually lead to decreased average length of stay, alterations in visitor itineraries, and even changes in event duration or size. Analysts also warn that what starts in Chicago may become a template for tourism-dependent cities facing similar pressures—a domino effect that could redefine cost dynamics in urban travel across the nation.
What travelers can do to save money
If you’re planning a trip to Chicago and wish to minimize costs under the new tax structure, consider booking outside the immediate city limits or using loyalty points to offset increased hotel rates. Alternative accommodations, such as short-term rentals in neighboring towns, may offer both tax relief and a more suburban, quieter experience. It’s also worth booking early, especially around event dates, as rates are expected to climb substantially due to both high demand and the tax burden passed on to consumers.
Short FAQs about Chicago’s new tourist tax
What is the current hotel tax rate in Chicago?
The combined hotel occupancy tax in Chicago is now 17.4%, the highest in the U.S.
When was the new tax implemented?
The new tax rate is already in effect citywide as of early 2024.
Does this tax apply to Airbnbs and vacation rentals?
Yes. All short-term hospitality services within city limits are affected, including Airbnbs and other vacation rentals.
Will the tax increase again before the 2026 World Cup?
There are no announced plans for further increases, but budget committees have not ruled it out.
Are other cities likely to follow Chicago’s lead?
Industry experts believe this could set a precedent, especially in other cities hosting major global events.
What can visitors do to reduce costs?
Consider booking outside Chicago city limits, staying with friends, or using travel loyalty programs.
Will this affect convention and event planning in the city?
Yes. Organizers might think twice due to cost implications for attendees and vendors.
Is the tax increase permanent?
Yes, this is a permanent change with no current expiration date on the tax hike.
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